PSA Peugeot Citroen has introduced a pioneering hybrid vehicle concept that combines a conventional engine with compressed nitrogen propulsion. The automaker claims that it will cut in half the cost of reducing emissions compared with the existing petrol-electric hybrids. The company also said that the "Hybrid Air" system, which was created with auto parts supplier Robert Bosch, would not be as heavy as a hybrid that runs on petrol and battery power.

Peugeot is struggling to control losses and to achieve more growth internationally and to do that, it is cutting over 10,000 jobs. The launch for this new technology will be around 2016. Its vehicles will cost lower than 20,000 euros ($26,600). During a press conference last Tuesday, Bosch automotive chief Bernd Bohr told reporters that the cost per gram of CO2 reduction will be “very competitive."

The new Peugeot is different from Toyota's Prius hybrid, which supplements a conventional engine with an electric motor. Instead, the new Peugeot model will be powered by a separate hydraulic motor that’s run by nitrogen compressed by energy from braking and deceleration. Peugeot said that during city driving, the vehicles can run using compressed gas power for up to 80% of the time without the three-cylinder petrol engine. According to Peugeot, a prototype Hybrid Air subcompact has CO2 emissions of 72 grams per km.

Meanwhile, a Peugeot 208 model with the same combustion engine emits 104 grams per km. Development chief Guillaume Faury said that Peugeot seeks to give a price below 20,000 euros for these subcompact vehicles with the new technology.

The starting price of the Toyota Yaris hybrid, which has the same size as the Peugeot model, is at around 18,500 euros in France (which excludes any discounts related to environmental friendliness). Faury didn’t provide detailed cost estimates but said that the new transmission would reduce the cost per gram of CO2 savings by about 50% when matched up against equivalent petrol-electric hybrids. He added that this new power unit has a weight of 100 kg, around half of the other typical hybrids.